Leading economists see no reason to scrap dividend tax: Telegraaf

The new government’s controversial plan to scrap the dividend tax for companies, which will cut the treasury’s income by €1.4bn, is not backed by many of the country’s leading economists, the Telegraaf reported on Wednesday.

The plan is an ‘expensive present’ for foreign firms and will not generate extra jobs for the Netherlands, the paper quotes the economists as saying.

Prime minister Mark Rutte has defended the decision to scrap the tax, which did not feature in any of the four coalition parties’ manifestos, saying it is crucial to keep jobs.

In addition, it is an essential measure to make sure the Netherlands remains a good place for foreign firms to set up business, he said.

Economics professor Sweden van Wijnbergen told the Telegraaf that claims about job losses are ‘total nonsense’ while tax expert Koen Camindada told the paper the move is ‘unnecessary and expensive’.

Tax deduction

Foreign investors currently pay 15% tax on the profit on their shares held in the Netherlands. However, in many countries, they are already able to deduct this from tax.

Nyenrode professor Jaap Koelewijn told the paper that if dividend tax is scrapped, these companies will have higher tax bills in their home countries. ‘It is a gift to foreign governments,’ he said.

The government’s macro-economic think-tank CPB has also said it sees no empirical evidence that scrapping the tax will boost jobs.

Shell

The NRC reported last week that oil giant Shell, which operates headquarters in both Britain and the Netherlands, had campaigned for the tax to be cut. The company has 11,000 workers in the Netherlands.

A letter dating from April 2016 entitled Shell input Verkiezingsprogramma’s called on political parties to ‘scrap the dividend tax’ because it ‘distorts the market and is a disadvantage to the Netherlands’ competitive position.’

The paper also pointed out that Gerrit Zalm, who negotiated the coalition agreement, is a non-executive director of Shell.